- Sales from three months to end of March increase 5.9% to US$4.38bn
- For the first nine months of fiscal 2025, sales flat (+0.6%) at $15.28bn
- Commences $500m cost savings programme “to create a more agile operating model”
Diageo has roared back to life in its most recent quarter, posting impressive sales growth in its fiscal third quarter.
The group, which has reverted to providing quarterly (rather than six-monthly) performance updates this year, said today (19 May) that sales in the three months to the end of March were up by almost 6%. The rise, which cycled a tough year-prior quarter for the group, has brought the year-to-date top line to parity with the corresponding nine months to March end in 2024.
The turbulence associated with tariff threats from the US skewed the three-month figures somewhat, as the phasing of imports into the country accelerated strongly. Subsequently, Diageo’s ‘North America’ division leapt in sales terms, by 6.2%. The star performer geographically, however, was ‘Latin America & Caribbean’ reporting region, which had been the problem child last year; sales were up by approaching 30% (28.5%).
The other three reporting regions were more indicative of Diageo’s ongoing performance, with ‘Africa’ up by 10.1% and ‘Asia Pacific’ and ‘Europe’ straddling the line at +1.6% and -0.4%, respectively. Of note was Diageo’s observation that its Guinness brand offset “spirits softness” in Europe during the three-month period.
Also highlighted in the trading update was the launch of ‘Accelerate’, a company-wide programme designed to “deliver sustainable consistent performance”. The programme will include a cost-savings element what will aim to reduce costs by around $500m over the next three years.
Further details were not disclosed, although the announcement has echoes of similar recent moves by rivals Brown-Forman, Campari Group and Moet Hennessy, all of whom intend to lower their global headcounts in the coming months.
“In the third quarter, we delivered strong organic net sales growth and are on track to deliver on our guidance of sequential improvement in organic net sales performance in the second half of fiscal ’25 [to the end of June],” said CEO Debra Crew. “We view the near-term industry pressure as largely macro-economic driven, with continued uncertainty impacting both the timing and pace of recovery.
“Consistent with our strategic priorities and our focus on what we can manage and control, we are introducing the first phase of our Accelerate programme. This sets out clear near-term cash delivery targets and a disciplined approach to operational excellence and cost efficiency. It will strengthen Diageo by increasing our effectiveness, agility and resilience.”
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- Moët Hennessy
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